Thai Airways Profit Falls 87% as Fuel Costs Double

Revenue Growth Fails to Offset Fuel Shock

Thai Airways International posted a net profit of 1.54 billion baht for the second quarter of 2026, an 87% decline from 12.13 billion baht in the same period last year. The steep drop came despite an 8.5% year-on-year increase in total revenue to 48.62 billion baht, as the carrier grappled with fuel costs that more than doubled.

The airline's results underscore the vulnerability of Southeast Asian carriers to energy price volatility. Average jet fuel prices surged 104.6% compared to Q2 2025, driven by ongoing unrest in the Middle East. Total operating expenses climbed 29.7% to 44.93 billion baht, with fuel representing the dominant cost pressure.

Thai Airways maintained an operating profit margin of 17.5% before finance costs, recording operating profit of 3.69 billion baht. However, finance costs of 3.16 billion baht and the sharp fuel expense increase eroded bottom-line results significantly.

Passenger Yield Rises, But Traffic Softens

The airline's revenue growth stemmed primarily from pricing power. Average passenger yield, which includes fuel and insurance surcharges but excludes excess baggage fees, jumped 20.3% year-on-year. Thai Airways carried 3.66 million passengers during the quarter.

Yet demand showed signs of softening. Available seat kilometers fell 4.4% to 16.78 billion, while revenue passenger kilometers dropped 11.3% to 11.99 billion. The carrier attributed the capacity reductions to flight cuts prompted by Middle East tensions, which dampened passenger travel appetite. Cabin factor, a key load measure, slipped to 71.5% from 77.0% a year earlier.

As of June 30, the airline operated a fleet of 84 aircraft, averaging 12.9 hours of utilization per plane per day.

Balance Sheet Expands, Cash Position Solid

Thai Airways reported total assets of 322.08 billion baht as of June 30, up 5.9% from year-end 2025. Total liabilities rose 5.3% to 240.25 billion baht, while shareholders' equity increased 7.8% to 81.83 billion baht.

The carrier held 123.76 billion baht in cash, cash equivalents, and other current financial assets at the end of the quarter, providing a buffer against near-term volatility.

First-Half Performance Holds Up

For the six months ended June 30, Thai Airways recorded total revenue of 99.65 billion baht, up 3.3% from the prior-year period. Operating expenses climbed 14.4% to 82.21 billion baht. Operating profit before finance costs reached 17.44 billion baht.

Finance costs for the half totaled 6.15 billion baht. The airline also recognized 1.42 billion baht in one-time revenue, largely from gains on lease terminations and modifications. Net profit for the first half came to 11.64 billion baht.

The half-year figures reflect a business navigating recovery from years of restructuring, now confronting a new set of external headwinds. While passenger yields improved and the balance sheet strengthened, the fuel cost surge presents a structural challenge that pricing alone cannot fully offset.

Thai Airways faces a delicate balancing act: sustaining yield gains without further eroding load factors in a region where price sensitivity remains high and competition from low-cost carriers intensifies. The carrier's ability to manage capacity, hedge fuel exposure, and maintain liquidity will determine whether profitability can be sustained as oil markets remain volatile.